In this Appendix the text set in grey is identical to Appendix 3

Financial management
There is no clear evidence that the Council operated a strong financial management policy
  • There reporting of the Councils financial position appears to have not been made available and the essential financial information available in the accounting system appears not to have been used to inform the Councils financial decision making.
  • There is no evidence that the Council undertook the appropriate financial risk assessment prior to taking on the project, including identifying the cost /benefit to the community, the loan/income gearing ratio.
  • There appears to be no regular, open and detailed financial reports to the Council on the financial management of the project.
  • There is no evidence of a regular reporting of the Councils financial risk on the project and its impact on the Councils financial position
  • The spending of any contingencies was not clearly reported to the Council.

The impact of the spending of the contingencies should have been identified as a possible indicator that the Councils financial management of the project was starting to escalate.

Members of the Working Group Observations
  1. I the situation where Councillors took on extremely important roles within the project management of the car park and then relinquished them at a key time, was an abdication of responsibility and did not ‘promote the well-being of the community’ which has been said to be a requirement for the position of a council member. Where councillors remained on the Parish Council then it would have seemed appropriate that their views should have been aired at council meeting and not in small groups.
  2. A greater emphasis on the ‘shared corporate responsibility’ and ‘duty’ needs to be given as it has been clear that that this has not been the case, a number of councillors commented that they were ‘not kept informed’ of what was happening with the project and using this as a reason for not raising concerns especially in relation to the cost, where it could be seen that this is just an ‘excuse’ to use after the failure to control the finances on the project.
  3. Whilst the Working Group appreciate that the comment in the report about ‘the culture of organisations is to look for people to blame if things do not turn out as expected’ but we are not talking about a small project here it was a considerable spend which still required an initial loan of £200,000 which was voted in by the full council followed by an additional £50,000 plus due to the overspend. The Working Group believe that the people involved should have been held to account if this is an appropriate course of action and may be something for the current council to consider?
  4. There is no evidence that the Council adequately identified their gearing ratio for borrowing to income. The fact that this project was given the go ahead shortly after a previous venture (the construction of the village Hub) had been completed that had already placed the Parish Council in a poor state of finances and that no consideration was given to this especially when consulting with the public. The points made within the report under the section Public Consultation mention that public consultation is ‘particularly suggested where it involves major projects and assets or where the cost of a project will have a large impact on the council’s finances’, both of which this project did yet there was no consultation with the public on this.
  5. Under the section ‘Accountability’ it is mentioned that the council pushed forward with the project for the benefit of the community; however, the Working Group would question, this has although it appears to benefit only a small section of the community that were affected by the anti-social behaviour taking place in the old car park. However, the Working Group believe that this would not pass a cost/benefit analysis. Several members of the public that have attended council meetings have raised relevant points regarding lower cost options such as CCTV with one even pointing out that the COOP offered a proposal which was turned down without any real consideration or feasibility study as to how this may work.
  6. The Working Group feel obligated within the report to raise concerns regarding the current position that the Parish finances now find themselves to be in. It is clear that the management of the council’s finances with due diligence for the benefit of the community’ is one of the biggest failures of the previous council. Although the precept had increased, in real terms, the Parish Council had 65k less available to spend, as this was the amount needed to service PWLB for loans on the Hub and car park”. Having reviewed the past Accounting statements for 2011/12 the total balances and reserves at the year-end were 610,445 with no borrowings, the annual precept for the year was 190,309 which showed the finances to be very healthy; however the Accounting statement for 2016/17 show that the annual precept for the year had risen 195,917 with total borrowings of 888,380 (this requires a figure of nearly 50,000 per annum for the capital and interest payments) and total balances and reserves of only 115,707. The extra 15,000 to make up the 65,000 comes from the subsidy payment to the Hub. Although the role of the Working Group was to focus on the Car Park it is important that we don’t overlook the situation with the Hub, as there is a link when raising the issue of ‘good financial planning with due diligence’ when embarking on projects. It is not good financial planning to borrow money just because it is cheap to borrow due to low interest rates, as you also must take into account how much has to be repaid including the capital and not just the interest and it is clear that this has place the village in a perilous financial position for the next 20 years
  • The Council should review its financial management of the Council to ensure that it can fund its high level of borrowing and continue to maintain its essential services to the community of Melborn.